Pakistan-China ties and CPEC

Abdul Razak Dawood, Prime Minister Imran Khan’s Adviser on Commerce, Textile, Industry & Production and Investment, told the Financial Times that the previous Pakistan Muslim League (Nawaz ) government did not get a good deal for Pakistan in CPEC (China Pakistan Economic Corridor), and that Pakistan has lost out as a result of poor negotiations.

Dawood also made the point that some of the CPEC projects could be put on hold for a year, and CPEC can be stretched up to five years. Said Dawood: ‘Perhaps we can stretch CPEC out over another five years or so.’

Interestingly, during Chinese Foreign Minister Wang Yi’s recent Pakistan visit, Pakistan’s Foreign Minister, Shah Mehmood Qureshi, assured the former that Pakistan would accord high priority to CPEC — which was of immense economic and strategic importance for Pakistan. Qureshi also stated that projects would be implemented at the earliest outset. Even the normally outspoken Pakistan Finance Minister, Asad Umar, was cautious, and categorically said that ‘We don’t intend to handle this process like Mahathir.’ Imran Khan also met with Wang Yi, and a statement from the Pakistani side read as follows:

‘The Prime Minister reiterated that the Government is committed to the implementation of the CPEC.’

Wang Yi on his part emphasized on the fact that CPEC was not responsible for Pakistan’s debts. He also stated that Beijing was willing to re-negotiate a Free Trade Agreement which, according to many in Pakistan, was heavily skewed in favour of China and has faced domestic opposition.

During the course of a meeting between the Planning, Development and Reforms Commission of Pakistan and the National Development and Reforms Commission (NDRC) of China, two interesting aspects were added to the existing agreement. The first, that third countries would be allowed to invest in the upcoming 9 Special Economic Zones (SEZs) of CPEC. The Chinese delegation during the meeting is supposed to have conveyed the point that it was open to investment from countries which were friendly to both Pakistan and China to invest in the SEZs. Some of the potential countries discussed were Turkey, Russia, and Saudi Arabia

Second, ‘social sector’ schemes and regional development schemes were added to the existing CPEC projects. Social sector schemes include drinking water, health, education, and technical training. The inclusion of these areas was done keeping in mind the priorities of the current government.

Is a significant re-think towards CPEC possible?

There is no doubt that Islamabad’s dependence upon China would have increased as a consequence of its current economic situation and it’s deteriorating ties with Washington (days before US Secretary of State Mike Pompeo landed in Islamabad, military aid to the tune of $300 million was withdrawn). Yet, some re-think vis-à-vis CPEC can not be ruled out because a number of Pakistani politicians have expressed discomfort with the lack of transparency regarding the project.

Transparency with regard to the CPEC project

When in opposition, Imran had himself spoken about the need for greater transparency and openness with regard to the project. Before the elections in July 2018, many analysts argued that the Chinese would be far more comfortable with parties like the PPP and the PML-N as opposed to Imran Khan.

The protests of Khan and his party (PTI) against the previous PML-N government were also viewed with skepticism by the Chinese who believed that these protests would be detrimental to the progress of the project. Khan during his meeting, in 2016, with the Chinese Envoy to Pakistan tried to address the apprehensions of the Chinese by saying he was all for the project.

One of the objections of Pakistani politicians from Non-Punjabi provinces (across parties), as well as analysts, was that the project was Punjab Centric. In November 2017, members from the Senate, including the then-ruling party, PML-N, had spoken about the lack of transparency of CPEC, and had also alluded to the fact that China was benefitting at Pakistan’s expense.

Apart from domestic politics, the firm stance taken by Malaysian Prime Minister Mahathir Mohammad with regard to some Chinese projects (the Malaysian PM scrapped projects worth $20 billion) is also important and has forced a rethink in Pakistan . An editorial in Dawn titled ‘Rearranging CPEC’ also cited Mahathir’s stance against Chinese projects. While it is unlikely that Pakistan may follow suit as was stated by the Finance Minister, Asad Umar, as well as by Abdul Razak Dawood himself (Dawood in fact had to clarify that his remarks with regard to CPEC had been quoted out of context), there will be groups in Pakistan (especially members of the business community) who could nudge the current government towards tweaking the CPEC agreement further as well as resetting the Pakistan-China economic relationship to some extent.

China itself can not afford to ignore Mahathir’s stance, as well as his statement about the rise of a ‘new colonialism’. The address of Chinese President Xi Jinping at the Africa-China Summit, as well as Wang Yi’s statements during his Pakistan visit, are clear indicators that China is not taking Mahathir’s statements lightly. Whether Imran Khan can be a Mahathir of course is a different issue.

Lack of options and GHQ

While there may be certain personalities within the current government who are making the right noises with regard to the CPEC project, Islamabad’s economic situation has reduced its options.

Apart from this, the Pakistan army (which runs the show when it comes to complex foreign policy issues) has robust ties with Beijing, and will prevent any drastic changes to the CPEC agreement. During his meeting with Wang Yi, Pakistan’s Chief of Army Staff, General Qamar Javed Bajwa, assured the visiting Chinese Minister of full support. The Chinese also had a robust relationship with former Pakistan Army Chief, Raheel Sharif.

A re-think on CPEC, as well as Pakistan-China economic relations (highly unlikely in the short run), would benefit not just Pakistan, but could have broader ramifications, and may compel more countries to rethink their ties with China.

Mahathir Mohammad deserves credit for highlighting the shortcoming of China’s infrastructural projects as well as its economic ties with certain countries. This debate is not likely to die down soon, though not every country is in a position to take a bold stand like Mahathir. Imran Khan, in private, may be supporting Mahathir’s approach towards China, but can not afford to do so publicly.

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